Green Dot 2010 Annual Report Download - page 48

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As a result of entering into our amended agreement with Walmart, we changed the manner in which
customer funds for certain products sold at Walmart are settled, eliminating the need to record settlement
assets and liabilities related to these products. This change resulted in a significant reduction in our
settlement assets and settlement obligations associated with Walmart and GE Money Bank, respectively.
Key components of our results of operations
Operating Revenues
We classify our operating revenues into the following four categories:
Card Revenues — Card revenues consist of new card fees, monthly maintenance fees, ATM fees and
other revenues. We charge new card fees when a consumer purchases a GPR or gift card in a retail store.
We charge maintenance fees on GPR cards to cardholders on a monthly basis pursuant to the terms and
conditions in our cardholder agreements. We charge ATM fees to cardholders when they withdraw money
or conduct other transactions at certain ATMs in accordance with the terms and conditions in our
cardholder agreements. Other revenues consist primarily of fees associated with optional products or
services, which we generally offer to consumers during the card activation process. Optional products and
services that generate other revenues include providing a second card for an account, expediting delivery
of the personalized GPR card that replaces the temporary card obtained at the retail store and upgrading a
cardholder account to one of our premium programs — the VIP program or Premier Card program —
which provide benefits for our more active cardholders. Historically, our card revenues have also included
customer service fees that we charged in accordance with the terms and conditions in our cardholder
agreements.
Our aggregate new card fee revenues vary based upon the number of GPR cards activated and the
average new card fee. The average new card fee depends primarily upon the mix of products that we sell
since there are variations in new card fees among Green Dot-branded and co-branded products and
between GPR cards and general purpose gift cards. Our aggregate monthly maintenance fee revenues
vary primarily based upon the number of active cards in our portfolio and the average fee assessed per
account. Our average monthly maintenance fee per active account depends upon the mix of Green Dot-
branded and co-branded cards in our portfolio and upon the extent to which fees are waived based on
significant usage. Our aggregate ATM fee revenues vary based upon the number of cardholder ATM
transactions and the average fee per ATM transaction. The average fee per ATM transaction depends
upon the mix of Green Dot-branded and co-branded active cards in our portfolio and the extent to which
cardholders enroll in our VIP program, which has no ATM fees, or conduct ATM transactions on our fee-
free ATM network.
Cash Transfer Revenues — We earn cash transfer revenues when consumers purchase and use a
MoneyPak or fund their cards through a POS swipe reload transaction in a retail store. Our aggregate cash
transfer revenues vary based upon the total number of MoneyPak and POS swipe reload transactions and
the average price per MoneyPak or POS swipe reload transaction. The average price per MoneyPak or
POS swipe reload transaction depends upon the relative numbers of cash transfer sales at our different
retail distributors and on the mix of MoneyPak and POS swipe reload transactions at certain retailers that
have different fees for the two types of reload transactions.
Interchange Revenues — We earn interchange revenues from fees remitted by the merchant’s bank,
which are based on rates established by Visa and MasterCard, when cardholders make purchase
transactions using our cards. Our aggregate interchange revenues vary based primarily on the number
of active cards in our portfolio, the average transactional volume of the active cards in our portfolio and on
the mix of cardholder purchases between those using signature identification technologies and those
using personal identification numbers.
Stock-based retailer incentive compensation — We recognize each month the fair value of the
36,810 shares issued to Walmart for which our right to repurchase has lapsed using the then-current
fair market value of our Class A common stock (and we would be required to recognize the fair value of all
39